Electronic trading systems have become more and more popular over the years and have replaced earlier, manual, forms of trading. Especially in the financial market, electronic trading systems are important to provide a fair and properly working market place for trading.
The trading can be based on different principles for reaching a deal. For instance, in the bond market it is customary that users enter bids and offers which can be hit or taken by other users; whereas in the futures market the users enter bids and offers, and the trading system compares these and matches them into deals.
Although the trading principles per se can be viewed as a form of negotiation, there is a need for more precise and versatile systems and methods for negotiation of prices (or other aspects in the terms of a deal) within electronic trade systems.
US patent application publication No. 2003/0088501 discloses a system where an inner market is set up at selectable intervals for providing a negotiation platform for a selected amount of users. The selection of users is by picking those users that currently have the best bids and offers on the market. Within the inner market only bids and offers that improve on the general market will be accepted and only those participating in the inner market may trade.
Another principle of limited negotiation is disclosed in US patent application publication No. 2003/0033239. Here a user of the system may enter a Request For Quote (RFQ), i.e. asking for a price on a specific instrument. The system posts the RFQ to a selected group of users, who may respond to the RFQ by sending in a quote on price (buy or sell depending on character of the RFQ). If a quote is sent in to the system, it is forwarded to the user who entered the RFQ. The user may then accept, reject or counter-quote the quote. If an agreement is reached, a trade is made. The system also includes a time limit for the negotiation.
Both the above systems are similar in that the negotiation only involves a limited group of users and that there is no information to other users of what is going on.
There is a need for a more versatile and precise method for negotiating trades between users of an electronic trading system that does not impair fairness and openness vis-à-vis other users on the market.
There is also a need for an electronic trading system that provides for a versatile and precise negotiation procedure for users without impeding on fairness and openness to other users on the market.